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The African Continental Free Trade Area (AfCFTA) will unlock several opportunities for African and global businesses in the automotive industry to seize.
The automotive industry in Africa is expected to grow to over US$42 billion by 2027, from US$30.44 billion in 2021, an almost 40 percent rise in value, due to increasing domestic demand, rising incomes and high projections for intra-African trade.
This is according to the AfCFTA secretariat Secretary General, Wamkele Mene, at the 16th Common Market for Eastern and Southern Africa (COMESA) Business Forum in Lusaka.
“Fortunately, the continent is endowed with vast deposits of rare mineral resources, including lithium-ion, cobalt, nickel and copper, which are some of the most important raw materials for a rapidly changing industry electric cars.
“And demand for electric vehicles is growing across the continent as some of Africa’s main trading partners have banned internal combustion engine vehicle sales as early as 2035,” Mene said.
He said Africa could, therefore, lead the world in resolving the climate change challenge by providing electric car solutions through value addition of its mineral resources and manufacturing strategy.
Read more: AfCFTA can help Africa reduce climate change risks, says IMF
Mene also said the investors on the AfCFTA market do not need to limit themselves to these sectors, Africa is incredibly vibrant and entrepreneurial, so there are opportunities everywhere.
He said the agriculture sector has a high potential for economic growth, employment and inclusivity, and could spur an increase in intra-African trade.
Currently, the continent imports US$50 billion more food than it exports per year, but, by 2030, intra-African agricultural trade is projected to increase by 574 percent if import tariffs are eliminated compared to a scenario without the AfCFTA.
Mene, said Africa had more than 60 percent of the remaining arable land in the world and agriculture initiatives would help create a brighter future for the continent.
“So, with an improvement in performance, Africa can, for instance, fill the gap of the wheat and sunflower supply previously provided by Russia and Ukraine.
“Importantly, since value addition has always been the missing link in agriculture, it is crucial that we ensure that Africa plays an enhanced role along the entire agriculture value chain, for example not only in the cocoa trade but in the chocolate industry,” he said.
He also said agro-processing specifically had unique strengths for investors and African countries alike.
Mene said the sub-sector was described as the most important of manufacturing because of the greater stability of world prices for processed agricultural products compared to raw products.
He said there are also opportunities in the pharmaceutical sector.
Recent data indicates that Africa imports close to US$10 billion (2019) in value for pharmaceutical products.
Mene said with the AfCFTA, the continent has an opportunity to facilitate intra-African trade in pharmaceutical products and medical sundries made in Africa.
“This will help ramp-up capacity for Africa to source its own pharmaceutical products and as a result, insulate itself against the unwelcome Covid-19 vaccine nationalism the continent experienced,” he said.
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